The Warrick operations of US aluminium giant Alcoa near Yankeetown, Indiana, is expected to save about $3 million from lower interest rates on a major pollution control project as a result of action taken this week by the Indiana Finance Authority. The IFA awarded a "volume cap" designation to the company, a move that enables Alcoa to obtain tax-exempt financing for an approximately $400 million upgrade at the Warrick County smelter and mill.

Alcoa's Warrick coal-fired power plant generates electricity and steam for the nearby Warrick Operations along the Ohio River about 10 miles east of Evansville, Indiana. Alcoa is installing scrubbers on all four units of the power plant to reduce pollution and making other upgrades as well.

Royce Haws, primary metals location manager at Warrick Operations, said the project is vital to the plant's future. The plant improvements are expected to result in drastic cuts in air emissions and will eliminate 6 to 8 million gallons of wastewater daily.

The IFA was formed in 2005 to administer the state's Volume Cap program. "Volume cap" refers to the amount of tax-free financing available for certain projects in a given year. The program is designed to reduce the cost of new projects for eligible businesses. Warrick Operations, with more than 2,000 employees, is one of the largest employers in southwestern Indiana.

State nickel and gold miner PT Aneka Tambang (Antam) said the company and its partners have formed a joint venture called PT Indonesia Chemical Alumina (ICA) to build a chemical grade alumina plant in Tayan, West Kalimantan province.

Antam's equity partners in the joint venture firm are Japan's Showa Denko KK (SDK) with 30 pct, Straits Trading Amalgamated Resources Private Limited of Singapore (STAR) with 15 pct, and Japan's Marubeni Corporation with 6 pct.

Antam holds the remaining 49 pct, with an option to increase its ownership to 51 pct in the future.

Based on a previous feasibility study in 2003 the project is capable of producing around 300,000 tons of chemical grade alumina per year, Antam said while noting that the figure could change once the study is updated.

Antam expects construction to begin in late 2007 and commercial operations to begin in 2010 with the alumina to be sold to Japan and other countries as well as internally.

The project is likely to be funded 65 pct through debt and 35 pct through equity, the company told XFN Asia.
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The Chinese government has given its approval for Qingtongxia Aluminium Group – China's second largest aluminium producer – to invest in an alumina project in India, producing one million tonnes a year, Reuters reports, citing the company's president Huang He.

Qingtongxia has bought a 50% stake in India's Ashapura Minechem Ltd's project to build the alumina plant – the company's first investment in alumina. The venture will also mine bauxite in India. Smaller Chinese aluminium producer Sichuan Aostar Aluminum Co Ltd last year withdrew from Ashapura's project and transferred its stake to Qintongxia.

Huang adds that a thorough bauxite exploration study will begin soon and construction of the alumina plant will start within two years.

The venture will invest Yu5.05 billion (US$652 million) to build the alumina plant and capital investment will be Yu 1.51 billion.

Other local companies have been encouraged by the Chinese government to buy resources overseas.

Huang said a thorough bauxite exploration study would be starting soon and construction of the alumina plant would start within two years.

The equal-stake joint venture would invest a total of 5.05 billion yuan ($652 million) to build the alumina plant, he said. Capital investment would be 1.51 billion yuan.

Qingtongxia and the Indian partner would meet 2 or 3 Chinese and Indian banks this year for financing the project, Huang said.

Qingtongxia in 2006 produced 415,000 tonnes of primary aluminium and aims to churn out about 430,000 tonnes in 2007.

It also has a joint venture with Alcan Inc to operate another 150,000 t/y of aluminium capacity in Ningxia.

The European Union and the Gulf Corporation Council are now in the final stages of the negotiation over the creation of a free trade agreement and a conclusion could be reached anytime between now and summer, a spokesman from the office of EU Commissioner for Trade, Peter Mandelson, told Platts Wednesday.

A portion of the FTA is expected to see the removal of a 6% import tariff on aluminium for the Gulf states.

"The EU has offered a number of key concessions including on aluminium – on the understanding that nothing is finally agreed until everything is agreed," said the spokesman, adding: "A realistic timeframe for completing the negotiation would be between now and the summer – but no final date has been set."

Aluminium is a key topic for the GCC since its aluminium exports to the EU are hit by a 6% import duty and the Gulf region is increasingly becoming a key producer of the metal.

On February 21, an EC trade spokesman told Platts that the elimination of duties on a number of aluminium tariff lines were part of the discussions for a FTA with the GCC, "which has specific interests in that sector."

He said as the negotiations were still ongoing, the EC could not provide specifics on which lines or aluminium products might be affected, but confirmed that both non-alloyed and alloyed aluminium products were on the list for discussion.

The spokesman said then that on May 8 there would be a joint EU-GCC council meeting at ministerial level in Riyadh. "This is a political event foreseen in the 1989 EU-GCC Cooperation Agreement that takes place every year," he said, adding however, that the FTA outcome was not directly related to this meeting. "The whole negotiating package (coverage) is still open and as a result, we cannot be too specific. What we can tell you is that both primary aluminium products, non-alloyed and alloys, are on the list," he said. Power said there were two lists, A and B. "List A will have reduced tariffs from the date of implementation, list B after four years," he said, adding that both alloy and non-alloy aluminium products were on list A.

The spokesman said once negotiations were concluded, the EC would propose a council decision to adopt the agreement. "Once adopted by the EU and GCC side, the agreement has to be implemented by both parties," he said, adding that on voting, the council decision accepting the agreement would either be majority vote or unanimity. "Whether unanimity is required will depend upon the precise content of the agreement," he said. Power added that the council decision would be for the whole agreement, so it would enter into force all at once. The GCC is a regional organization created in May 1981 by Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates.

Recent limitations imposed on the exports of China's anode to Iran have been lifted, said an official with Iran's major aluminium producer, Almahdi Aluminum Corp.

Anode and alumina are the main raw material required for the production of aluminium.

Iran's annual imports of anode from China hit around 60,000 tons.

Currently, Iran produces around 40 percent of its alumina requirements and the rest is imported from foreign sources, including China.

However, upon completion of an alumina production plant in the country, the nation's need for the commodity is expected to be significantly reduced.

Annual aluminium production at Almahdi Aluminum Corp. stands at 110,000 tons, of which some 100,000 tons have been so far produced, noted Mehdi Saqafi.

He also explained the company requires around 220,000 tons of alumina per annum to produce such amount.

Physical aluminium premiums in Europe have eased over the last month and will continue to do so as cash prices fall and the market begins to unwind, physical traders said Thursday.

Duty paid aluminium premiums have pushed as high as $240 a metric ton in the last couple of weeks, but have since eased to between $180/ton and $200/ton.

A premium is the amount paid to account for costs including insurance, freight, and shipping of aluminium to and from LME warehouses.

For the last few months aluminium futures traded on the London Metal Exchange have been in a backwardation, indicating a tight physical market.

As a result, prices for cash delivery have been higher than forward prices and in recent weeks market players have been putting metal into warehouses in order to take advantage of this, leading to a drop in premiums and a less tight market.

LME cash aluminium is trading at around $100/ton higher than the three months price.

Since the start of 2007, aluminium stocks held in LME warehouses have climbed roughly 15%, with an increase of roughly 24% in European warehouses alone.

"Business remains quiet because the backwardation is still there, but I'm optimistic business will pick up soon," said a Sweden-based trader.

Because metal is being attracted into warehouses, the physical market isn't considered tight.

"I don't see general physical tightness for the time being," said a Swiss-based aluminium trader, adding that only if aluminium demand stays strong due to European industrial activity will premiums tighten.

Senior aluminium analyst Jorge Vazquez of HARBOR Intelligence expects European premiums to continue lower due to forecasts of slowing European demand growth and increasing global aluminium supply growth. Vazquez also said the lingering possibility that E.U. aluminium duty will be cut in the near future could also help European aluminium premiums lower.

On Feb. 9, a proposal for an initial cut in the E.U.'s import duty to 3% from 6% with perhaps a further reduction to zero by Jan. 1, 2009, was blocked after a clear opposed minority emerged amongst some of the E.U. government representatives.

Previously, traders had been holding off from deliveries in anticipation of a cut to the duty.

However, a Swedish-based physical trader said the block in the duty no longer is an immediate focus for the industry as it's unlikely anything will happen this year.

Tomas Kucirek, head of unit for the E.U.'s tariff economics and customs duties division, said the future of the blocked proposal is now in the hands of the German E.U. presidency with no precise date or meeting scheduled in the near future.

Kucirek said he hoped some progress would come before the changeover in E.U. presidency by Portugal this summer. However, Germany isn't believed to be in a hurry to push the proposal forward, because they, along with France and Spain, oppose the duty cut as many smelters are located in those countries.

Polish listed chemical firm Boryszew's fourth-quarter financial result and operating figure were weighed down by the polymer sector, acting Chief Financial Officer Piotr Szeliga told reporters at a press conference Thursday.

"[D]espite good financial results of [Boryszew's metals unit] Impexmetal, the fourth-quarter results are weaker," said Piotr Szeliga.

"The main reason for the situation are problems in the polymer sector."

Boryszew Thursday reported consolidated net loss of PLN 46.5 in the three months to December, versus PLN 80.6 mln net income in the year-earlier period. Revenues rose 55% year-on-year (y/y) to PLN 1.2 bln.

Boryszew's operating income was down as much as 97% to PLN 2.4 mln, versus PLN 73 mln a year earlier.

The polymer segment dragged down the result, as rising raw-material prices and overcapacity combined to bring about losses.

In the unfavorable environment, Boryszew decided to disinvest its German polyester unit Kuag Elana. Boryszew took a PLN 41 mln write-down on the asset sale. Kuag Elana was established by Boryszew in 2005, after acquisition of an organized part of Kuag Oberbruch plant from the bankruptcy trustee.

Separately, the Q4 net figure was influenced by a PLN 16 mln write-down on a stake in bio-fuels firm Skotan, Szeliga said.

For the full-year 2006 period, Boryszew reported consolidated net figure down 62% y/y to a loss of PLN 47.7 mln from PLN 124.8 mln in profit against a 187% increase in revenues to PLN 5.4 bln from PLN 1.9 bln the prior year.

The consolidated 2006 operating income advanced 30% to PLN 149.9 mln from PLN 115.4 mln the year-earlier period.

Annual figures were boosted by the aluminium business with record high results of Boryszew's metal unit Impexmetal reported for the fourth quarter 06.

"The Impexmetal group is the largest value driver," said Piotr Szeliga Thursday.

Impexmetal saw a 379% y/y increase in consolidated net profit to PLN 57.3 mln for the three months to December from PLN 11.9 mln, whereas consolidated revenues grew 39% to PLN 971 mln from PLN 697.5 mln.

"Sales increase reflects not only a rise in volume but also a very big growth in metal prices," according to Szeliga.

For operating earnings, Impexmetal group reported 332% growth to PLN 56.5 mln for the fourth quarter from PLN 13.1 mln the year-earlier period.

Boryszew expects the aluminium division to remain its key driver this year with sales rising on benefits from the restructuring plan, established in May 2006 and being realized since than, and an investment program of PLN 230 mln for 2005-2007 that should help to boost sales to 130,000 tonnes annually in 2008, according to Rafal Swistak, Boryszew's proxy.

Polish listed chemical firm Boryszew's fourth-quarter financial result and operating figure were weighed down by the polymer sector, acting Chief Financial Officer Piotr Szeliga told reporters at a press conference Thursday.

"[D]espite good financial results of [Boryszew's metals unit] Impexmetal, the fourth-quarter results are weaker," said Piotr Szeliga.

"The main reason for the situation are problems in the polymer sector."

Boryszew Thursday reported consolidated net loss of PLN 46.5 in the three months to December, versus PLN 80.6 mln net income in the year-earlier period. Revenues rose 55% year-on-year (y/y) to PLN 1.2 bln.

Boryszew's operating income was down as much as 97% to PLN 2.4 mln, versus PLN 73 mln a year earlier.

The polymer segment dragged down the result, as rising raw-material prices and overcapacity combined to bring about losses.

In the unfavorable environment, Boryszew decided to disinvest its German polyester unit Kuag Elana. Boryszew took a PLN 41 mln write-down on the asset sale. Kuag Elana was established by Boryszew in 2005, after acquisition of an organized part of Kuag Oberbruch plant from the bankruptcy trustee.

Separately, the Q4 net figure was influenced by a PLN 16 mln write-down on a stake in bio-fuels firm Skotan, Szeliga said.

For the full-year 2006 period, Boryszew reported consolidated net figure down 62% y/y to a loss of PLN 47.7 mln from PLN 124.8 mln in profit against a 187% increase in revenues to PLN 5.4 bln from PLN 1.9 bln the prior year.

The consolidated 2006 operating income advanced 30% to PLN 149.9 mln from PLN 115.4 mln the year-earlier period.

Annual figures were boosted by the aluminium business with record high results of Boryszew's metal unit Impexmetal reported for the fourth quarter 06.

"The Impexmetal group is the largest value driver," said Piotr Szeliga Thursday.

Impexmetal saw a 379% y/y increase in consolidated net profit to PLN 57.3 mln for the three months to December from PLN 11.9 mln, whereas consolidated revenues grew 39% to PLN 971 mln from PLN 697.5 mln.

"Sales increase reflects not only a rise in volume but also a very big growth in metal prices," according to Szeliga.

For operating earnings, Impexmetal group reported 332% growth to PLN 56.5 mln for the fourth quarter from PLN 13.1 mln the year-earlier period.

Boryszew expects the aluminium division to remain its key driver this year with sales rising on benefits from the restructuring plan, established in May 2006 and being realized since than, and an investment program of PLN 230 mln for 2005-2007 that should help to boost sales to 130,000 tonnes annually in 2008, according to Rafal Swistak, Boryszew's proxy.

Australia's Alumina Limited on Monday announced a A$250 million ($195 million) off-market buyback tender for ordinary shares.

Alumina's directors considered a number of capital management initiatives to improve the company's capital structure, and concluded that an off-market buyback would be the most effective way to deliver additional benefits to shareholders. The directors also believe that shareholders will benefit from improving the company's debt and equity mix by a prudent level of debt, bringing its capital structure more in line with that of other Australian public companies.

The buyback will involve a tender process, under which eligible shareholders will be invited to offer to sell their shares to Alumina at discounts from 8% to 14% to the market price and/or as a final price tender. Alumina will determine the final buyback price based on the largest discountin the tender range that enables the repurchase of its targeted amount of capital.

Alumina's CEO John Marlay said: "An off-market buyback rather than an on-market transaction, will enable us to buy back shares at a significant discount."

Alumina said the off-market buyback, together with the 20% increase in the final dividend announced in February, are possible because of the company's strong earnings and cash flow, continuing positive outlook for the alumina and aluminium markets and strong franking account balance, the outlook of which is more secure due to the funding agreement signed with Alcoa in 2006. The company added that it is continuing to invest significantly in the growth of Alcoa World Alumina & Chemicals' alumina refining capacity.

The Alumina board believes that the proposed off-market buyback will not affect the capacity of the company, subject to business conditions, to maintain annual dividends of at least A$0.24 cents fully franked.

The Australian Taxation Office has accepted that the buyback price will comprise a capital component of A$0.36/share, with the remainder deemed a fully franked dividend for Australian taxation purposes.

Alumina is listed on the ASX and the NYSE. The company's strategy is to invest world-wide in bauxite mining, alumina refining and selected aluminium smelting operations through its 40% ownership of Alcoa World Alumina & Chemicals (AWAC), the world's largest alumina business. Alumina's partner, Alcoa, owns the remaining 60% of AWAC and is the manager.

Copper rose as the market recovered from this week's sharp declines, which were prompted by a global market sell off following the plunge in the Chinese stock market on Tuesday.

At 12.09 pm, LME copper for three month delivery was up at 6,130 usd a tonne against 6,015 usd at yesterday's close.

Tariq Salaria, an analyst at Standard Chartered Bank, said metals have recovered as the market realises the sell off in the Chinese market was simply a correction from overbought conditions.

He added copper was also benefiting from a trend towards falling inventories, which seem to indicate the Chinese have returned to the market this year as buyers.

The LME said in a daily report earlier copper stocks held in its warehouses dropped by 2,575 tonnes to total 205,400 tonnes. Stocks have now fallen for four days running.

Meanwhile, Chinese imports continue to rise. Data out in China yesterday showed imports of refined copper jumped an annual 86.3 pct in January to 131,851 tonnes.

"Stability is returning to the metals markets which, together with further falls in LME stocks this morning ... should see buyers nibbling away on the belief that current price levels are attractive," said UBS Investment Bank analyst Robin Bhar.

Aluminium edged up to 2,846 usd a tonne against 2,815 usd even as LME inventories rose by 550 tonnes to total 803,300 tonnes.

LME aluminium stocks have been rising steadily of late because the cash metal is still trading at a large premium to the three month price, attracting physical metal into warehouses.

The condition is known as backwardation.

"Although we are not long term fans of aluminium, in the short term the backwardation and dominant long position may well keep prices well bid," said BaseMetals.com analyst William Adams.

Nickel was up at 41,800 usd a tonne against 41,395 usd as the metal continued to benefit from critically low stocks and expectations demand will stay solid going forward.

"Nickel is likely to stay in high demand as steel demand and production world wide, especially in China, shows little signs of a slowdown," said Standard Bank analyst Michael Skinner.

In other metals, tin was up at 13,425 usd a tonne against 13,150 usd at the close yesterday, lead was up at 1,900 usd a tonne against 1,820 usd while zinc was up at 3,559 usd against 3,480 usd.

Xinyu Iron and Steel Co. Ltd. started construction of a new steel facility upgrade yesterday, after approval from the provincial Development and Reform Commission, a company official said today.

The total investment in the project based in Jiangx Province is RMB 12.6 billion ($1.63 billion) and will allow Xinyu Steel to produce 3 million tons of steel coils per year. Current production is limited to medium steel-plates, wires, strips and silicon sheets, according to a company official who asked to remain anonymous told Interfax.

Construction completion date has been set for the end of 2009 and will be split into two phases. The first-phase will be completed by the end of next year and will increase annual output of hot-rolled steel coils to between 1.5 million and 1.75 million tons, and cold-rolled steel coils to 1.2 million tons.

In addition, Xinyu Steel will abandon high-energy consuming and low-production capacity equipment, and implement energy conservation and environmental protection projects at the steel facility.

Xinyu Steel, a leading steelmaker in China, produced 446,000 tons of steel last month, up 12.3 percent from the same period last year.

Japan's top two steelmakers Thursday revised up their profit outlook for the fiscal year to March as high-grade steel demand from auto makers and shipbuilders remains strong and keeps prices high.

The steel makers upward profit revisions reflect Japanese manufacturers' robust consumption of high-grade steel sheets and plates, and some success in negotiating higher prices with key customers.

Nippon Steel Corp., Japan's top steel maker by output, said it now expects a record Y345 billion in group net profit for the year, up from the previously estimated Y310 billion.

Nippon Steel also lifted its group pretax profit forecast to Y580 billion from Y525 billion. The newly forecast pretax profit will also be an all-time high.

JFE Holdings Inc., the No. 2 steelmaker, now expects Y295 billion in group net profit for the year, up from the 290 billion projected previously.

It lifted its group pretax profit outlook to Y500 billion from Y490 billion.

Profits from products sold to auto makers, shipbuilders and other manufacturers are cushioning the blow from rising prices for iron ore and coal, as well as the downward pressure on global steel prices brought on by Chinese steel makers' aggressive production increases.

"We expected (demand from) domestic manufacturers to grow, but we didn't think it would grow as strongly as it did," Nippon Steel Vice President Nobuyoshi Fujiwara said at a news conference.

Fujiwara said the latest forecast doesn't reflect the expected outcome of the company's price negotiations with automakers, leaving room for still stronger profit growth.

JFE Holdings Vice President Toshikuni Yamazaki said at a separate news conference he expects the market climate for high-grade steel products to remain favorable in the next fiscal year starting April and that JFE's profit will keep growing.

"I believe that profit (in the next fiscal year) will not come below the level we project for this fiscal year," Yamazaki said.

JFE also announced its board has decided to adopt takeover defenses and will seek shareholders' approval of the measures at a meeting in June.

Under the plan, it will issue share warrants to defend against a takeover if a hostile acquirer tries to buy 20% or more of the company's shares.

Kobe Steel Ltd. maintained its profit outlook for the fiscal year to March in its earnings guidance, forecasting a group net profit of Y100 billion.

The three steelmakers, which have all started paying interim dividends from this fiscal year, also announced their dividend payout plan for the fiscal second half. Their total payment for this fiscal year will be higher than they paid last year.

Nippon Steel will pay a dividend per share of Y6 for the fiscal second half, raising the total payment for this fiscal year to Y10 from the previous year's Y9.

JFE will pay a second-half dividend of Y70 per share, raising the total payment for this fiscal year to Y120 from the previous year's Y100.

Gold continues to be buffeted by speculative liquidation, some disillusionment in the wake of its anemic reaction to turmoil in paper assets, and by improving geopolitical conditions," said Jon Nadler, an analyst at Kitco Bullion Dealers.

On Wednesday, gold ended at a one-week low of $672.50 an ounce, down 2.1% or $14.70. Still, the contract ended the month of February with a gain of $14.60, or 2.2%.
"Despite the fact that we are long-term bulls of gold, we find it disconcerting that spot gold has seemingly badly failed in the past two or three days to push upward through $685 to $690," said Dennis Gartman, publisher of the Gartman Letter.

It's important that gold has failed to advance under circumstances that might otherwise have been considered quite bullish, Gartman said.

"Collapsing share prices would seem to be a positive for gold to many, but from our perspective, for the moment it is bearish instead," he said. "If Chinese shares continue under pressure, then Chinese buyers shall be reticent about buying gold, and may have little choice but to sell gold to raise cash and capital where needed."

On Thursday, the Dow Jones Industrial Average recovered from an early steep fall, as news that the manufacturing sector grew in February helped offset nervousness about Asian markets, distressed lenders and the housing market, which had all rekindled the heavy selling pressure seen two days ago.

"Depending on the magnitude of the decline we get in the Dow and the urgency of the rush for the liquidity exit doors again, gold may have a knee-jerk reaction once more to fears that money will not seek it, but perhaps bonds or Treasuries again," Nadler said.

"Today may just be a continuing link in the chain of volatility that could be with us for the next month or so."

Overnight, major Asian stock markets, including China, Japan and Hong Kong, ended lower. Investors focused on developments in Shanghai, where shares gave back about two-thirds of their gains from the previous day.

On the currency markets, Japan's yen resumed its rally against most major currencies Thursday, touching a 2 1/2-month high versus the dollar, on continued talk of carry-trade unwinding and worries about the outlook for the U.S. economy and global stock markets. The dollar rose against the euro after the manufacturing data.